If you are a director or owner of a limited company that has ceased trading, you will need to notify HM Revenue & Customs (HMRC) and Companies House. In this blog, we will discuss the steps you need to take to inform HMRC your company ceases to exist, including the importance of filing the relevant paperwork with Companies House, and some of the keywords you should be familiar with.
First, let’s define some of the key terms you’ll need to know:
- Ceased trading: This means that your company has stopped trading and is no longer carrying out any business activity.
- Limited company: A limited company is a type of business structure in which the owners’ personal liability is limited to the amount of money they have invested in the company.
- Dormant company: A company is considered dormant if it is not carrying out any business activity but is still registered with Companies House.
- Unique Taxpayer Reference (UTR): The 10-digit number that HMRC assigns to your company when you register for corporation tax.
- Confirmation statement: This is a document that limited companies must file with Companies House every year to confirm the company’s registered details.
- Annual accounts: Limited companies must file annual accounts with Companies House, which provide information about the company’s financial performance.
The steps you need to take to inform HMRC that your company has ceased trading:
1 – File your company tax return
If your company has stopped trading, you will still need to file your company tax return. This is because your company is still considered to exist until it has been officially dissolved by Companies House. You should file your tax return for the period up to the date your company ceased trading.
2 – Close your company’s bank accounts
You should close all of your company’s bank accounts, as well as any credit accounts or finance agreements. You should also make sure that any outstanding debts or liabilities are settled.
3 – Inform HMRC that your company has ceased trading
To inform HMRC that your company has ceased trading, you should write to them and include the following information:
- Your company’s name and registration number
- The date on which your company ceased trading
- The reason why your company has ceased trading
- Your company’s UTR number
- Your company’s final accounting period
You should also include any other relevant information, such as whether your company is dormant for corporation tax purposes, or whether you have any outstanding tax liabilities.
4 – File your company’s final accounts and confirmation statement
Once you have informed HMRC that your company has ceased trading, you will need to file your company’s final accounts and confirmation statement with Companies House. This should be done within 9 months of your company’s financial year-end.
If your company is dormant, you should file dormant accounts and a confirmation statement. If your company has traded, you should file full annual accounts and a confirmation statement.
5 – Transfer any remaining intellectual property
If your company has any intellectual property, such as patents or trademarks, you will need to transfer ownership to another party. This could be an individual or another company.
What happens if you do not notify HMRC that a company has ceased trading
If a company has ceased trading, it is important to notify HMRC as soon as possible. Failure to do so can result in penalties and legal issues.
If you do not notify HMRC that a company has ceased trading, the company will continue to be regarded as an active taxpayer, and the company will still be required to file tax returns and pay any outstanding taxes. This can result in penalties and interest being charged on late or unpaid taxes.
In addition, if the company continues to be regarded as an active taxpayer, HMRC may take legal action to recover any unpaid taxes. This could include seizing company assets or taking legal action against the directors of the company.
It is important to remember that if a company is insolvent, the directors have a legal duty to take appropriate steps to wind up the company’s affairs, including notifying HMRC of the company’s cessation of trading.
Failure to do so could result in the directors being held personally liable for any outstanding taxes and other debts of the company.
In conclusion, if your limited company has ceased trading, it’s important to follow the steps outlined above to inform HMRC and Companies House. Remember to file your company tax return, close your company’s bank accounts, and inform HMRC that your company has ceased trading.
You should also file your company’s final accounts and confirmation statement with Companies House and transfer any remaining intellectual property to another party. By following these steps, you can ensure that your company is officially dissolved and no longer exists.
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